The 52 week low list is littered with retail stocks.  We all know about Trump’s plans for border taxes, import taxes etc.  Clearly, this is hurting retail stocks until we have clarity.

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My friend Becky Hiu has pointed out that the retail industry continues to make new lows relative to the S&P 500.  Notice the divergence of the lower pane while price continues to make higher lows.

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So what does this tell us?

Well one, we don’t need to rush out and buy these stocks thinking they’ll turn around right away.  At this point, buying retail stocks is like swimming upstream.

Could buying some of these stocks now work?  Sure, but in general we want to allow these headwinds to come to fruition and do more share price and sentiment damage.

If the technical argument doesn’t do it for you, let’s put it this way.  If you just look around and think about it, there are too many damn stores selling similar stuff of similar quality.   We don’t need all of them.  With this major “Trump” crimp on profitability, the weak companies are more likely to die off and the survivors will form a stronger industry in the long run.

Trade ’em well!